Costco’s first South Island warehouse has been referred to the fast-track process. The Minister for Infrastructure accepted the referral application on 14 October, which lets Costco seek consent from an expert panel rather than through the usual council process.
The applicants are Costco Wholesale New Zealand Limited and Miles Premises Limited, which owns the land. The site covers about 17.68ha in Avonhead, bounded by Memorial Avenue, Avonhead Road and Russley Road (State Highway 1), close to Christchurch Airport.
What’s planned
The warehouse would have a gross floor area of about 16,090m², with a tyre centre, food court and retail area. Plans also include a members’ fuel station for cars and trucks, and about 7,900m² of other large-format retail.
An economic assessment by Insight Economics, filed with the application, puts the total investment at about $90 million. Costco’s share is an estimated $65 million, covering the warehouse, fuel station and site works.
Once trading, the assessment estimates about 400 direct full-time-equivalent jobs, roughly 250 at Costco and 150 across the other retail. Counting flow-on effects, it puts the total at 486 FTEs, $32 million a year in wages and salaries and $57 million a year in GDP. Construction would add about 350 FTE-years of work and $63 million in Canterbury GDP, the referral application says.
Why it was referred
The Minister’s decision cites the economic benefits and says the project would promote competition in a grocery market that’s currently highly concentrated.
The Commerce Commission’s 2022 grocery market study found Woolworths NZ and Foodstuffs “operate as a duopoly with a fringe of other competing grocery retailers”. Costco opened its first New Zealand warehouse at Westgate in Auckland in 2022, and a North Island store is also planned at Drury.
Officials’ briefing to the Minister summarised the Grocery Commissioner’s view that the store was likely to deliver competition benefits in Canterbury.
Consumer NZ head of research and advocacy Gemma Rasmussen told chrislynchmedia.com that supermarkets near the store could be expected to price a little sharper. The Pak’nSave near Costco’s west Auckland store was reported to have cut some prices when it opened in 2022.
Rasmussen said the bulk-buying model and annual membership fee wouldn’t suit everyone, because shoppers need storage space and the money to buy in bulk rather than week to week. “Some people will be locked out of the saving potential of bulk buying,” she said.
ACT leader and Deputy Prime Minister David Seymour said the bid showed that when fast-track removes red tape and regulation, people invest.
Christchurch City Council was neutral on the referral. It noted the site isn’t in an identified centre, that building on industrially zoned land may affect industrial land supply, and that any upgrades not in its Long Term Plan would be at the applicant’s cost.
Environment Canterbury supported the referral. Christchurch International Airport and NZTA didn’t oppose it, but raised height limits, lighting and bird strike, and traffic at the Memorial Avenue interchange.
Waimairi ward councillor Sam MacDonald, whose ward includes the site, said a Costco would be welcome as long as traffic was kept off local streets in Avonhead, Ilam and Burnside.
What happens next
The referral doesn’t approve the store. Costco now has two years to lodge a substantive application, which an expert panel will decide.
That application must include an integrated transport assessment and an assessment of aviation safety, including any engagement with Christchurch International Airport. The project also needs resource consents, and possibly Wildlife Act approval. No opening date has been given.
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